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Question 4 (9 Marks) a. At the end of each of the following five years, Eason is going to withdraw $30,000 from an investment account
Question 4 (9 Marks) a. At the end of each of the following five years, Eason is going to withdraw $30,000 from an investment account that pays interest at a rate of 8% compounded annually. How much must there be in the investment account today in order for his account to reduce to a balance of zero after the last withdrawal? Show all your calculations. 4 marks b. Sun Insurance Group offers to sell your uncle, Isaac, an annuity which will pay him $25,000 per quarter for 20 years. If the rate of return is 6% compounded quarterly, what is the most uncle Isaac will be willing to pay today to buy this annuity? Show all your calculations
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